Nestlé backs its commitment to PPPs

April 21, 2010

Josette Dunn

Nestlé has reaffirmed its commitment to one of its key growth drivers Popularly Positioned Products (PPPs), by announcing that the Company expects to generate global sales of CHF 20 billion over the coming years.PPPs meet the specific needs of around 3 billion consumers with lower income levels, many of whom are entering into the cash economy and buying branded goods for the first time. As such, PPPs are adapted in terms of nutritional composition, price, accessibility and format to meet their specific requirements.

At a press conference in Jakarta, Arshad Chaudhry, CEO for Nestlé Indonesia, said: “The benefits of PPPs are threefold: they help deliver a balanced nutritional diet for emerging consumers, generate profitable growth for Nestlé, and contribute to the economies of emerging countries such as Indonesia and their population. PPPs are defined as one of Nestlé’s main growth drivers for the years to come and the Nestlé Group expects worldwide PPP sales of CHF 20 billion over the coming years.”

In 2009, PPPs accounted for CHF 8.8 billion overall and grew three times faster than the rest of the Nestlé Group. PPPs’ growth potential is linked to a rising demography and wealth: the population in emerging markets is expected to grow by 3.3 billion by 2050 and one billion additional consumers will be entering the cash economy within the next ten years. Overall, the Nestlé Group reached sales of CHF 35 billion in emerging markets in 2009.

Arshad Chaudhry added: “PPPs make a big difference in a country like Indonesia, where better nutrition positively impacts not only the health, development and education of lower-income consumers but also the local economy. PPPs are a clear expression of the principle of Creating Shared Value, which is part of our business strategy: for a business to be successful in the long term, it must create value not only for its shareholders but also for society and communities at large, from farmers to employees to consumers.”

In terms of nutritional value, PPPs are specifically designed to address the most common micronutrient deficiencies prevalent amongst emerging consumers. Around 40% of the Indonesian population consume less than 50% of the recommended daily amount of vitamin A and iron. Products such as Nestlé Ideal milk powder and Koko Krunch have been fortified with iron, calcium, and vitamins A, C, and D.

In order to guarantee their affordability, PPPs are developed in a way that allow consumers to buy them on a regular basis; furthermore they are manufactured from local raw materials to minimise value chain costs and distributed via various channels, including street markets and mobile street stalls.

Nestlé’s PPPs range stretches from culinary products to beverages and dairy to confectionery, totalling over 3,950 products. PPP versions of major global brands include Maggi, Milo and Nescafé.

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